Heirs of Cayetano Pangan and Consuelo Pangan v. Perreras, G.R. No.

157374, August 27, 2009

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 157374

August 27, 2009

HEIRS OF CAYETANO PANGAN and CONSUELO

PANGAN,* Petitioners,
vs.
SPOUSES ROGELIO PERRERAS and PRISCILLA
PERRERAS, Respondents.
DECISION
BRION, J.:
The heirs1 of spouses Cayetano and Consuelo Pangan
(petitioners-heirs) seek the reversal of the Court of
Appeals (CA) decision2 of June 26, 2002, as well its
resolution of February 20, 2003, in CA-G.R. CV Case
No. 56590 through the present petition for review on
certiorari.3 The CA decision affirmed the Regional Trial
Courts (RTC) ruling4 which granted the complaint for
specific performance filed by spouses Rogelio and
Priscilla Perreras (respondents) against the petitionersheirs, and dismissed the complaint for consignation
instituted by Consuelo Pangan (Consuelo) against the
respondents.
THE FACTUAL ANTECEDENTS
The spouses Pangan were the owners of the lot and
two-door apartment (subject properties) located at
1142 Casaas St., Sampaloc, Manila.5 On June 2,
1989, Consuelo agreed to sell to the respondents the
subject properties for the price of P540,000.00. On the
same day, Consuelo received P20,000.00 from the
respondents as earnest money, evidenced by a receipt
(June 2, 1989 receipt)6 that also included the terms of
the parties agreement.
Three days later, or on June 5, 1989, the parties
agreed
to
increase
the
purchase
price
from P540,000.00 toP580,000.00.
In compliance with the agreement, the respondents
issued two Far East Bank and Trust Company checks
payable to Consuelo in the amounts of P200,000.00
and P250,000.00 on June 15, 1989. Consuelo,
however, refused to accept the checks. She justified
her refusal by saying that her children (the petitionersheirs) co-owners of the subject properties did not
want to sell the subject properties. For the same
reason, Consuelo offered to return the P20,000.00
earnest money she received from the respondents, but
the latter rejected it. Thus, Consuelo filed a complaint
for consignation against the respondents on September
5, 1989, docketed as Civil Case No. 89-50258, before
the RTC of Manila, Branch 28.
The respondents, who insisted on enforcing the
agreement, in turn instituted an action for specific
performance against Consuelo before the same court
on September 26, 1989. This case was docketed as
Civil Case No. 89-50259. They sought to compel
Consuelo and the petitioners-heirs (who were

subsequently impleaded as co-defendants) to execute a

Deed of Absolute Sale over the subject properties.
In her Answer, Consuelo claimed that she was justified
in backing out from the agreement on the ground that
the sale was subject to the consent of the petitionersheirs who became co-owners of the property upon the
death of her husband, Cayetano. Since the petitionersheirs disapproved of the sale, Consuelo claimed that
the contract became ineffective for lack of the requisite
consent. She nevertheless expressed her willingness to
return theP20,000.00 earnest money she received from
the respondents.
The RTC ruled in the respondents favor; it upheld the
existence of a perfected contract of sale, at least
insofar as the sale involved Consuelos conjugal and
hereditary shares in the subject properties. The trial
court found that Consuelos receipt of the P20,000.00
earnest money was an "eloquent manifestation of the
perfection of the contract." Moreover, nothing in the
June 2, 1989 receipt showed that the agreement was
conditioned on the consent of the petitioners-heirs.
Even so, the RTC declared that the sale is valid and
can be enforced against Consuelo; as a co-owner, she
had full-ownership of the part pertaining to her share
which she can alienate, assign, or mortgage. The
petitioners-heirs, however, could not be compelled to
transfer and deliver their shares in the subject
properties, as they were not parties to the agreement
between Consuelo and the respondents. Thus, the trial
court
ordered
Consuelo
to
convey
one-half
(representing Consuelos conjugal share) plus onesixth (representing Consuelos hereditary share) of the
subject properties, and to pay P10,000.00 as attorneys
fees to the respondents. Corollarily, it dismissed
Consuelos consignation complaint.
Consuelo and the petitioners-heirs appealed the RTC
decision to the CA claiming that the trial court erred in
not finding that the agreement was subject to a
suspensive condition the consent of the petitionersheirs to the agreement. The CA, however, resolved to
dismiss the appeal and, therefore, affirmed the RTC
decision. As the RTC did, the CA found that the
payment and receipt of earnest money was the
operative act that gave rise to a perfected contract, and
that there was nothing in the parties agreement that
would indicate that it was subject to a suspensive
condition. It declared:
Nowhere in the agreement of the parties, as contained
in the June 2, 1989 receipt issued by [Consuelo] xxx,
indicates that [Consuelo] reserved titled on [sic] the
property, nor does it contain any provision subjecting
the sale to a positive suspensive condition.
Unconvinced by the correctness of both the RTC and
the CA rulings, the petitioners-heirs filed the present
appeal by certiorari alleging reversible errors
committed by the appellate court.
THE PETITION
The petitioners-heirs primarily contest the finding that
there was a perfected contract executed by the parties.
They allege that other than the finding that Consuelo
received P20,000.00 from the respondents as earnest
money, no other evidence supported the conclusion
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Heirs of Cayetano Pangan and Consuelo Pangan v. Perreras, G.R. No. 157374, August 27, 2009

that there was a perfected contract between the

parties; they insist that Consuelo specifically informed
the respondents that the sale still required the
petitioners-heirs consent as co-owners. The refusal of
the petitioners-heirs to sell the subject properties
purportedly amounted to the absence of the requisite
element of consent.
Even assuming that the agreement amounted to a
perfected contract, the petitioners-heirs posed the
question of the agreements proper characterization
whether it is a contract of sale or a contract to sell. The
petitioners-heirs posit that the agreement involves a
contract to sell, and the respondents belated payment
of part of the purchase price, i.e., one day after the
June 14, 1989 due date, amounted to the nonfulfillment of a positive suspensive condition that
prevented the contract from acquiring obligatory force.
In support of this contention, the petitioners-heirs cite
the Courts ruling in the case of Adelfa Rivera, et al. v.
Fidela del Rosario, et al.: 7
In a contract of sale, the title to the property passes to
the vendee upon the delivery of the thing sold; while in
a contract to sell, ownership is, by agreement, reserved
in the vendor and is not to pass to the vendee until full
payment of the purchase price. In a contract to sell,
the payment of the purchase price is a positive
suspensive condition, the failure of which is not a
breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey
title from acquiring an obligatory force.
[Rivera], however, failed to complete payment of the
second installment. The non-fulfillment of the
condition rendered the contract to sell ineffective and
without force and effect. [Emphasis in the original.]
From these contentions, we simplify the basic issues
for resolution to three questions:
1. Was there a perfected contract between the
parties?
2. What is the nature of the contract between them?
and
3. What is the effect of the respondents belated
payment on their contract?
THE COURTS RULING
There was a perfected contract between the
parties since all the essential requisites of a
contract were present
Article 1318 of the Civil Code declares that no contract
exists unless the following requisites concur: (1)
consent of the contracting parties; (2) object certain
which is the subject matter of the contract; and (3)
cause of the obligation established. Since the object of
the parties agreement involves properties co-owned by
Consuelo and her children, the petitioners-heirs insist
that their approval of the sale initiated by their
mother, Consuelo, was essential to its perfection.
Accordingly, their refusal amounted to the absence of
the required element of consent.

That a thing is sold without the consent of all the coowners does not invalidate the sale or render it void.
Article 493 of the Civil Code8 recognizes the absolute
right of a co-owner to freely dispose of his pro
indiviso share as well as the fruits and other benefits
arising from that share, independently of the other coowners. Thus, when Consuelo agreed to sell to the
respondents the subject properties, what she in fact
sold was her undivided interest that, as quantified by
the RTC, consisted of one-half interest, representing
her
conjugal
share,
and
one-sixth
interest,
representing her hereditary share.
The
petitioners-heirs
nevertheless
argue
that
Consuelos consent was predicated on their consent to
the sale, and that their disapproval resulted in the
withdrawal of Consuelos consent. Yet, we find nothing
in the parties agreement or even conduct save
Consuelos self-serving testimony that would indicate
or from which we can infer that Consuelos consent
depended on her childrens approval of the sale. The
explicit terms of the June 8, 1989 receipt9 provide no
occasion for any reading that the agreement is subject
to the petitioners-heirs favorable consent to the sale.
The presence of Consuelos consent and, corollarily,
the existence of a perfected contract between the
parties are further evidenced by the payment and
receipt of P20,000.00, an earnest money by the
contracting parties common usage. The law on sales,
specifically Article 1482 of the Civil Code, provides
that whenever earnest money is given in a contract
of sale, it shall be considered as part of the price
and
proof
of
the
perfection
of
the
contract. Although the presumption is not conclusive,
as the parties may treat the earnest money differently,
there is nothing alleged in the present case that would
give rise to a contrary presumption. In cases where the
Court reached a conclusion contrary to the
presumption declared in Article 1482, we found that
the money initially paid was given to guarantee that the
buyer would not back out from the sale, considering
thatthe parties to the sale have yet to arrive at a
definite agreement as to its terms that is, a situation
where the contract has not yet been perfected.10 These
situations do not obtain in the present case, as neither
of the parties claimed that the P20,000.00 was given
merely as guarantee by the respondents, as vendees,
that they would not back out from the sale. As we have
pointed out, the terms of the parties agreement are
clear and explicit; indeed, all the essential elements of
a perfected contract are present in this case. While the
respondents required that the occupants vacate the
subject properties prior to the payment of the second
installment, the stipulation does not affect the
perfection of the contract, but only its execution.
In sum, the case contains no element, factual or legal,
that negates the existence of a perfected contract
between the parties.
The characterization of the contract can be
considered irrelevant in this case in light of
Article 1592 and the Maceda Law, and the
petitioners-heirs payment
The
petitioners-heirs
posit
that
the
proper
characterization of the contract entered into by the
parties is significant in order to determine the effect of
the respondents breach of the contract (which
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Heirs of Cayetano Pangan and Consuelo Pangan v. Perreras, G.R. No. 157374, August 27, 2009

purportedly consisted of a one-day delay in the

payment of part of the purchase price) and the
remedies to which they, as the non-defaulting party,
are entitled.
The question of characterization of the contract
involved here would necessarily call for a thorough
analysis of the parties agreement as embodied in the
June 2, 1989 receipt, their contemporaneous acts, and
the circumstances surrounding the contracts
perfection and execution. Unfortunately, the lower
courts factual findings provide insufficient detail for
the purpose. A stipulation reserving ownership in the
vendor until full payment of the price is, under case
law, typical in a contract to sell.11 In this case, the
vendor made no reservation on the ownership of the
subject properties. From this perspective, the parties
agreement may be considered a contract of sale. On
the other hand, jurisprudence has similarly
established that the need to execute a deed of absolute
sale upon completion of payment of the price generally
indicates that it is a contract to sell, as it implies the
reservation of title in the vendor until the vendee has
completed the payment of the price. When the
respondents instituted the action for specific
performance before the RTC, they prayed that
Consuelo be ordered to execute a Deed of Absolute
Sale; this act may be taken to conclude that the
parties only entered into a contract to sell.
Admittedly, the given facts, as found by the lower
courts, and in the absence of additional details, can be
interpreted to support two conflicting conclusions. The
failure of the lower courts to pry into these matters
may understandably be explained by the issues raised
before them, which did not require the additional
details. Thus, they found the question of the contracts
characterization immaterial in their discussion of the
facts and the law of the case. Besides, the petitionersheirs raised the question of the contracts
characterization and the effect of the breach for the
first time through the present Rule 45 petition.
Points of law, theories, issues and arguments not
brought to the attention of the lower court need not be,
and ordinarily will not be, considered by the reviewing
court, as they cannot be raised for the first time at the
appellate review stage. Basic considerations of fairness
and due process require this rule.12
At any rate, we do not find the question of
characterization significant to fully pass upon the
question of default due to the respondents breach;
ultimately, the breach was cured and the contract
revived by the respondents payment a day after the
due date.1avvphi1

may pay, even after the expiration of the period, as

long as no demand for rescission of the contract has
been made upon him either judicially or by a notarial
act. After the demand, the court may not grant him a
new term. [Emphasis supplied.]
Nonpayment of the purchase price in contracts to sell,
however, does not constitute a breach; rather,
nonpayment is a condition that prevents the obligation
from acquiring obligatory force and results in its
cancellation. We stated in Ong v. CA13 that:
In a contract to sell, the payment of the purchase price
is a positive suspensive condition, the failure of which
is not a breach, casual or serious, but a situation that
prevents the obligation of the vendor to convey title
from acquiring obligatory force. The non-fulfillment of
the condition of full payment rendered the contract to
sell ineffective and without force and effect. [Emphasis
supplied.]
As in the rescission of a contract of sale for
nonpayment of the price, the defaulting vendee in a
contract to sell may defeat the vendors right to cancel
by invoking the rights granted to him under Republic
Act No. 6552 or the Realty Installment Buyer
Protection Act (also known as the Maceda Law); this
law provides for a 60-day grace period within which
the defaulting vendee (who has paid less than two
years of installments) may still pay the installments
due. Only after the lapse of the grace period with
continued nonpayment of the amounts due can the
actual cancellation of the contract take place. The
pertinent provisions of the Maceda Law provide:
xxxx
Section 2. It is hereby declared a public policy to
protect buyers of real estate on installment payments
against onerous and oppressive conditions.
Sec. 3. In all transactions or contracts involving the
sale or financing of real estate on installment
payments,
including
residential
condominium
apartments but excluding industrial lots, commercial
buildings and sales to tenants under Republic Act
Numbered Thirty-eight hundred forty-four as amended
by Republic Act Numbered Sixty-three hundred eightynine, where the buyer has paid at least two years of
installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding
installments:
xxxx

In cases of breach due to nonpayment, the vendor may

avail of the remedy of rescission in a contract of sale.
Nevertheless, the defaulting vendee may defeat the
vendors right to rescind the contract of sale if he pays
the amount due before he receives a demand for
rescission, either judicially or by a notarial act, from
the vendor. This right is provided under Article 1592 of
the Civil Code:

Section 4. In case where less than two years of

installments were paid, the seller shall give the buyer a
grace period of not less than 60 days from the date the
installment became due. If the buyer fails to pay the
installments due at the expiration of the grace period,
the seller may cancel the contract after thirty days
from the receipt by the buyer of the notice of
cancellation or the demand for rescission of the
contract by notarial act. [Emphasis supplied.]

Article 1592. In the sale of immovable property, even

though it may have been stipulated that upon failure
to pay the price at the time agreed upon the rescission
of the contract shall of right take place, the vendee

Significantly, the Court has consistently held that the

Maceda Law covers not only sales on installments of
real estate, but also financing of such acquisition; its
Section 3 is comprehensive enough to include both
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Heirs of Cayetano Pangan and Consuelo Pangan v. Perreras, G.R. No. 157374, August 27, 2009

contracts of sale and contracts to sell, provided that

the terms on payment of the price require at least two
installments. The contract entered into by the parties
herein can very well fall under the Maceda Law.

Footnotes
*

Deceased.

Victor, Ludinila, Hermelina, Virgilio, and Editha, all

surnamed Pangan; rollo, p. 33.
1

Based on the above discussion, we conclude that the

respondents payment on June 15, 1989 of the
installment due on June 14, 1989 effectively defeated
the petitioners-heirs right to have the contract
rescinded or cancelled. Whether the parties agreement
is characterized as one of sale or to sell is not relevant
in light of the respondents payment within the grace
period provided under Article 1592 of the Civil Code
and Section 4 of the Maceda Law. The petitionersheirs obligation to accept the payment of the price and
to convey Consuelos conjugal and hereditary shares in
the subject properties subsists.

Penned by Associate Justice Elvi John S. Asuncion

(separated from the service), with Associate Justice Portia
Alio-Hormachuelos and Associate Justice Edgardo F.
Sundiam (deceased), concurring, id., pp. 21-25.
2

Under Rule 45 of the Rules of Court; id., pp. 10-18.

In Civil Case Nos. 89-50258 and 89-50259, penned by

Judge Ed Vincent S. Albano on January 27, 1997,id., pp.
33-49.
4

The land is covered by TCT No. 16098 and registered in

the name of spouses Cayetano and Consuelo Pangan.
5

WHEREFORE, we DENY the petitioners-heirs petition

for review on certiorari, and AFFIRM the decision of
the Court of Appeals dated June 24, 2002 and its
resolution dated February 20, 2003 in CA-G.R. CV
Case No. 56590. Costs against the petitioners-heirs.

Rollo, p. 6. The receipt stated:

Received from Mrs. Prisicilla Perreras of #35
Nicanor Roxas St., Sta. Mesa Heights, Q.C. the
amount of Twenty Thousand Pesos (P20,000.00)
as EARNEST MONEY for the house and lot
located at 1140-1142 Casaas St., Sampaloc,
Manila.

SO ORDERED.
ARTURO D. BRION
Associate Justice

The total purchased [sic] price is Five Hundred

Forty Thousand Pesos (P540,000.00).

WE CONCUR:

Two
Hundred
Fifty
Thousand
Pesos
(P250,000.00) to be given on or before June
14/89.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CONCHITA CARPIOMORALES
Associate Justice

MARIANO C. DEL
CASTILLO
Associate Justice

ROBERTO A. ABAD
Associate Justice

The total balance of Two Hundred Seventy

Thousand Pesos (P270,000.00) to be given once
the tenants vacated [sic] the premises. [Emphasis
in the original.]
7

G.R. No. 144934, January 15, 2004, 419 SCRA 626.

The full text of Article 493 of the Civil Code reads:

Each co-owner shall have full ownership of his
part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person
in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to
him in the division upon the termination of the
co-ownership.

ATTESTATION
I attest that the conclusions in the above Decision had
been reached in consultation before the case was
assigned to the writer of the opinion of the Courts
Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision
were reached in consultation before the case was
assigned to the writer of the opinion of the Courts
Division.
REYNATO S. PUNO
Chief Justice

Supra note 6.

See Manila Metal Container Corporation v. Tolentino, G.R.

No. 166862, December 20, 2006, 511 SCRA 444; San Miguel
Properties Phil., Inc. v. Huang, G.R. No. 137290, July 31,
2000, 336 SCRA 737, citingSpouses Doromal v. CA, 66
SCRA 575 (1975).
10

See Cordero v. F.S. Management and Development

Corporation, Inc., G.R. No. 167213, October 31, 2006, 506
SCRA 451; Ramos v. Santiago, G.R. No. 145330, October
14, 2005, 473 SCRA 79; Rayos v. CA, G.R. No. 135528, July
14, 2004, 434 SCRA 365.
11

Pag-Asa Steel Works, Inc. v. CA, G.R. No. 166647, March

31, 2006, 486 SCRA 475.
12

13

G.R. No. 97347, July 6, 1999, 310 SCRA 1.

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